Is Salesforce.com Facing Possibility Of A Sell Off?
Market saturation and low growth are the factors that are moving it towards the direction; company declines to comment.
If rumors are to be believed, salesforce.com (NYSE:CRM) is under speculation of being taken over after reports have come about that company has proposed a buyout offer for an unsolicited price tag, according to a Bloomberg report around the end of last month.
However, nothing has come out from customer relationship management software company to either confirm the rumor, nor it is clear who is
There are only a few of those companies mentioned above who can fit into the category as potential buyers cause the market cap size for salesforce.com is less than $48 billion, which is significantly high
According to the financial reports from the fiscal year 2009, when the company first started its operations at the end of January this year, it has seen its annual sales boom from around more than a billion dollars to less than $5.5 billion this year. However, when year-on-year quarterly growth is taken into account, it has slipped from a high of 30% to 20% growth rate, and that trend is expected to be maintained for the rest of the next two-year period.
There are two reasons for this particular trend: low growth rate, as mentioned above, and market saturation. Many are beginning to wonder if the company has managed to reach its zenith that it is not being able to tap new markets for growth. Analysts are now starting to believe that the company may be sliding out of the ‘high growth’ group of companies.
However, it is normal for a company to see smaller percentages of growth once it gets bigger, and in the case of salesforce.com, it is not different. Growth there is likely to remain solid once it starts to enter into new market sectors, such as marketing services and data analytics, which it said that it would do so around later this year.
Kirk Materne, an analyst for Evercore ISI, points out that the company has a much broader portfolio, which is just now starting to penetrate into new territories in a calculated way, assuming that they have not entirely tapped the international market entirely; there is still a lot of growth potential out there. Therefore, a deceleration is way off the track for now.
Salesforce.com’s stock price ended the day at flat at $72.80, as investors stand confused as to where is the company heading to after they took a note of the decelerating growth trend for the last few years.
